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Budget 2023: OBR revises house price forecasts

The Office for Budget Responsibility (OBR) has increased its expectations of a house price decline.

The OBR, which keeps an eye on the government’s own finances and forecasts, has released its own economic outlook following Chancellor Jeremy Hunts mini-Budget.

While the chancellor’s update was light on specific property announcements, the OBR’s economic assessment suggest that house prices could fall by 10% from their high in the fourth quarter of 2022.


That is a one percentage point larger fall than in the OBR’s November forecast.

It is also anticipating that property transactions will drop by 20% relative to their peak between the final quarter of 2022 and third quarter of 2024.

The OBR said: “With more than 80% of mortgages on fixed-term contracts and the prevalence of fixed-rate mortgage contracts with terms of more than two years having risen in recent years, the increase in rates on new mortgages over recent months will take several years to feed through to the average mortgage rate.”

It claims that indicators from Halifax and Nationwide suggest that house prices have already fallen by 3% to 6% between their peak in the middle of 2022 and February 2023, adding: “Low consumer confidence, the squeeze on real incomes, and the expectation of mortgage rate rises to come are expected to contribute to continued falls in house prices and a reduction in housing market activity.”

The OBR is predicting a 1.1% house price decline this year and a 5.7% drop in 2024 before average values rise by 1.1% in 2025, 3.4% in 2026 and 3.6% in 2027.  

  • Proper Estate Agent

    Like they have a clue - this is their NOVEMEBR 2022 BS..

    " Its economic forecast shows it is expecting house prices to be up 10.7% annually by the end of this year but to then drop by 1.2% in 2023 and 5.7% in 2024.

    The OBR suggests prices will be up by 1.2% in 2025, by 3% in 2026 and by 3.5% in 2027."

  • icon

    And what will they revise their forecast to next week? Pointless exercise.


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